Indian Bare Acts

THE INDUSTRIAL DEVELOPMENT BANK OF INDIA ACT, 1964

Title : THE INDUSTRIAL DEVELOPMENT BANK OF INDIA ACT, 1964

Year : 1964

Section -9 Business of Development Bank

(1) 1*The Development Bank shall function as the principal financial institution for co-ordinating the working of institutions engaged in financing, promoting or developing industry and for assisting the development of such institutions in such manner as it may deem appropriate and may] carry on and transact any of the following kinds of business, namely:-

(a) Granting loans and advances to-

(i) The Industrial Finance Corporation, any State Financial Corporation or any other financial institution 2*[which may be approved by the Board in this behalf] by way of refinance of any loans or advances granted to industrial concerns 3 [***]] by such Corporation or institution which are repayable 4*[within a period not exceeding twenty-five years];

(ii) Any scheduled bank or State Co-operative Bank, by way of refinance of any loans or advances granted to industrial concerns 3 [***] by such bank which are repayable 5 [within a period not exceeding fifteen years];

(iii) Any scheduled bank or State Co-operative Bank or the Industrial Finance Corporation or any State Financial Corporation or any other financial institution which may be notified by the Central Government in this behalf, by way of refinance of any loans or advances granted to industrial concerns 3 [***] or group of industrial concerns by such bank or institution which are for the purpose of, or in connection with, the export of capital goods, commodities or merchandise from India 6 [or the execution of any turnkey project outside India by any industrial concern as aforesaid or by any person in India, and, in any case, are repayable-

(i) Within a period not exceeding twelve years in the case of persons outside India, and

(ii) Within a period not exceeding fifteen years in the other cases];

(b) Subject to such conditions as may be prescribed, accepting, discounting, or re-discounting bills of exchange and 7 [promissory notes made, drawn, accepted or endorsed by industrial concerns or by any person selling capitals goods manufactured by one industrial concern;]

(c) Subscribing to or purchasing stocks, shares, bonds or debentures of the Industrial Finance Corporation, any State Financial Corporation or 8*[any other financial institution whether within or outside India]. 2*[which may be approved by the Board in this behalf];

9*[(ca) Granting lines of creditor loans and advances to the Industrial Finance Corporation, any State Financial Corporation or any other financial institution 2*[which may be approved by the Board in this behalf], for the purpose of any business of such Corporation or institution];

(d) Granting loans and advances to any industrial concern or subscribing to, or purchasing, or underwriting the issue of, stocks, shares, bonds or debentures of any industrial concern:Provided that nothing contained in this clause shall be deemed to preclude the Development Bank from granting loans or advances to, or subscribing to debentures of, industrial concern, 10*[the amounts outstanding thereon may be convertible at the option of the Development Bank] into stocks or shares of that concern within the period the loan, advance or debenture is repayable;

11*[Explanation.-In this clause, the expression "the amounts outstanding thereon" used in relation to any loan or advance, shall mean the principal, interest and other charges payable on such loan or advance as at the time when the amounts are sought to be converted into stocks or shares.]

11*[(da) Granting loan and advances-

(i) To any person exporting products of industrial concerns; or

(ii) To any person outside India, in connection with the export of capital goods from India; or

(iii) For the execution of turn-key projects outside India by any industrial concern or by any person in India;

(db) Transferring for consideration any instrument relating to loans and advances granted by it to industrial concerns;]

9*[(dc) Granting loans and advances to any person for purposes of investment in any industrial concern;]

(e) Guaranteeing deferred payments due from any industrial concern;

(f) Guaranteeing-

(i) Loans raised by industrial concerns which are floated in the public market; and

(ii) Loans raised by industrial concerns from any scheduled bank or State Cooperative Bank or the Industrial Finance Corporation or any State Financial Corporation or any other financial institution 2*[which may be approved by the Board in this behalf];

(g) Guaranteeing the obligations of any scheduled bank or State Co-operative Bank or the Industrial Finance Corporation or any State Financial Corporation or any other financial institution 2*[which may be approved by the Board in this behalf] arising out of, or in connection with, underwriting the issue of stocks, shares, bonds or debentures of any industrial concern;

9*[(ga) Granting, opening, issuing, confirming or endorsing letters of credit and negotiating or collecting bills and other documents drawn there under;

(gc) Acting as the trustee for the holders of debentures or other securities;

(gd) Acquiring, with the approval of the Central Government, the undertaking, including the business, assets and liabilities of any institution the principal object of which is the promotion or development of industry in India, or the grant of financial assistance for such promotion or development;]

(h) Undertaking research and surveys for evaluating or dealing with marketing or investments and undertaking and carrying on techno-economic studies in connection with the development of industry;

(i) Providing technical9 [legal, marketing] and administrative assistance to any industrial concern or any person for promotion, management or expansion of any industry;

(j) Planning, promoting and developing industries to fill up gaps in the industrial structure in India;

12*[(k) Promoting, forming or conducting or associating in the promotion, formation or conduct of companies, subsidiaries, societies, trusts or such other associations of persons as it may deem fit;]

11*[(ka) acting as agent of-

(i) The Central Government or of the Reserve Bank, or

(ii) Such other Government or person as the Central Government 13 [In consultation with] the Reserve Bank, may authorise;]

(l) Performing functions entrusted to, or required of, the Development Bank by this Act or by any other law for the time being in force;

(m) Doing any other kind of business which the Central Government, 14 [***] may authorise;

(n) Generally doing such other acts and things as may be incidental to, or consequential upon, the exercise of its powers or the discharge of its duties under this Act or any other law for the time being in force including sale or transfer of any of its assets,

(2)The Development Bank may receive in consideration of any of the services mentioned in sub-section (1) such commission, brokerage, interest, remuneration or fees as may be agreed upon

(3) The Development Bank shall not grant any loan or advance or other financial accommodation on the security of its own bonds or debentures.

9A - 15*Prohibited business

(1) The Development Bank shall not enter into any kind of business with any industrial concern, of which any of the directors of the Development Bank is a proprietor, partner, director, manager, agent, employee or guarantor, or in which one or more directors of the Development Bank together hold substantial interest:

Provided that this sub-section shall not apply to any industrial concern if any director of the Development Bank-

(i) Is nominated as a director of the Board of such concern by Government, or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956), or by a Corporation established by any other law; or

(ii) Is elected on the Board of such concern by virtue of shares held in the concern by Government, or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956) or by a Corporation established by any other law, by reason, only of such nomination or election as the case may be.Explanation.-"Substantial interest", in relation to an industrial concern, means the beneficial interest held by one or more of the directors of the Development Bank or by any relative as defined in clause (41) of section 2 of the Companies Act, 1956 (1 of 1956), of such director, whether singly or taken together, in the shares of the industrial concern, the aggregate amount paid-up on which either exceeds five lakhs of rupees or five per cent of the paid up share capital of the industrial concern, whichever is the lesser.

(2) The provisions of sub-section (1)-

(i) Shall not apply to any industrial concern as specified therein if the Development Bank is satisfied that it is necessary in the public interest to enter into business with that concern, and entering into any kind of business with such industrial concern shall be in accordance with and subject to such conditions and limitations as may be prescribed;

(ii) Shall not apply to any transaction relating to the business entered into prior to the commencement of the Industrial Development Bank of India (Amendment) Act, 1972, and all such business and any transaction in relation thereto may be implemented or continued as if that Act had not come into force;

(iii) Shall apply only so long as the conditions precedent to such disability as set out in the said sub-section continue.

The Central Government may, after due appropriation made by Parliament by law in this behalf, advance to the Development Bank-

(a) An interest free loan of ten crores of rupees repayable in fifteen equal annual installments, commencing on the expiry of a period of fifteen years from the date of the receipt of the loan; and

(b) Such further sums of money by way of loan on such terms and conditions as may be agreed upon:

Provided that the Central Government may, on a request being made to it by the Development Bank, increase the number of installments or alter the amount of any installment or vary the date on which any installment is payable under clause (a).

Section -11 Borrowings and acceptance of deposits by Development Bank

(1) The Development Bank may, for the purpose of carrying out its functions under this Act,-

(a) Issue and sell bonds and debentures with or without the guarantee of the Central Government;

(b) Borrow money from the Reserve Bank-

(i) Repayable on demand or on the expiry of fixed periods not exceeding ninety days from the date on which the money is so borrowed against the security of stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in force in India;

(ii) Against bills of exchange or promissory notes arising out of bona fide commercial or trade transactions, bearing two or more good signatures and maturing within five years from the date of the borrowing;

(iii) Out of the National Industrial Credit (Long Term Operations) Fund established under section 46C of the Reserve Bank of India Act, 1934 (2 of 1934) for any of the purposes specified in that section;

(c) Borrow money from such other authority, organisation or institution in India as may be generally or specially approved by 1 [the Board];

(d) Accept deposits on such terms as may be approved by 1*[the Board.]

(2) The Central Government may, on a request being made to it by the Development Bank, guarantee the bonds and debentures issued by that bank as to the repayment of principal and the payment of interest at such rate as may be fixed by that Government.

11A -2* Power to transfer right

The rights and interests of the Development Bank (including any other rights and incidental thereto) in relation to any loan or advance granted, or any amount recoverable, by it may be transferred by the Development Bank, either in whole or in part, by the execution or issue of any instrument or by the transfer of any instrument by endorsement, or in any other manner in which the rights and interests in relation to such loan or advance may be lawfully transferred, and the Development Bank may, notwithstanding such transfer, act as the trustee for the transferee,

11B -3* Power to acquire rights

The Development Bank shall have the right to acquire, by transfer or assignment, the rights and interests of any public financial institution, as defined in section 4A of the Companies Act, 1956 (1 of 1956) (including any other rights incidental thereto) in relation to any loan or advances granted, or any amount recoverable by such institution, either in whole or in part, by the execution or issue of any instrument or by the transfer of any instrument or in any other manner.

(1) Notwithstanding anything contained in the Foreign Exchange Regulation Act, 1947 (7 of 1947) or in any other enactment for the time being in force relating to foreign exchange, the Development Bank may, for the purpose of granting loans and advances under this Act, borrow, with the previous consent of the Central Government, foreign currency from any bank or financial institution in any foreign country or otherwise.

(2) The Central Government may, where necessary, guarantee any loan taken by the Development Bank under sub-section (1) or any pan thereof as to the repayment of principal and the payment of interest and other incidental charges.

Section -13 Grants, donations, etc. to Development Bank

The Development Bank may receive gifts, grants, donations or benefactions from Government or any other source.

(1) The Board may refuse to register the transfer of any shares in the name of the transferee on any one or more of the following grounds, and on no other ground, namely:-

(a) The transfer of the shares is in contravention of the provisions of this Act or regulations made thereunder or any other law;

(b) The transfer of the shares, in the opinion of the Board is prejudicial to the interests of the Development Banker to the public interest;

(c) The transfer of shares is prohibited by an order of a court, tribunal or any other authority under any law for the time being in force.

(2) The Board shall, before the expiry of two months from the date on which the instrument of transfer of shares of Development Bank is lodged with it for the purpose of registration of such transfer, not only form, in good faith, its opinion as to whether such registration ought not or ought to be refused on any of the grounds referred to in sub-section (1) but also,-

(a) If it has formed the opinion that such registration ought not to be refused, effect such registration; and

(b) If it has formed the opinion that such registration ought to be refused on any of the grounds mentioned in sub-section (1), intimate the transferor and the transferee by notice in writing.

(3) An appeal against the order of refusal of the Board under sub-section (2) shall lie to the Central Government and the procedure for filing and hearing of such appeal shall be in accordance with the rules made by the Central Government in this behalf.

13E - Shares to be securities under the Indian Trusts Act, 1882

Notwithstanding anything contained in the Indian Trusts Act, 1882, the shares of the Development Bank shall be deemed to be included among the securities enumerated in section 20 of the said Act.

13F - Annual general meeting

(1)The Development Bank shall in each year hold, in addition to any other meetings, a general meeting as its annual general meeting and shall specify the meeting as such in the notices calling it; and not more than fifteen months shall elapse between the date of one annual general meeting and that of the next:

Provided that the Development Bank may hold the first annual general meeting within a period of six months from the date on which it allots shares for the first time to public for subscription:Provided further that the Central Government may extend the time within which any annual general meeting shall be held by a period not exceeding three months.

(2) Every annual general meeting shall be called for a time during business hours, on a day that is not a public holiday, and shall be held either at head office or at some other place within the city or town in which the head office is situate.

Explanation.-For the purposes of this section, "public holiday" means a public holiday within the meaning of the Negotiable Instruments Act, 1881:Provided that no Sunday shall be deemed to be such a holiday in relation to any meeting:

Provided further that no day declared by the Central Government to be a public holiday shall be deemed to be such a holiday, in relation to any meeting, unless the declaration was notified before the issue of the notice convening such meeting.

13G - Restriction on exercising of voting right

Every shareholder of the Development Bank holding equity shares shall have a right to vote in respect of such shares on every resolution and his voting right on a poll shall be in proportion to his share of the paid-up equity capital of the Development Bank:

Provided, however, that no shareholder other than the Central Government, shall be entitled to exercise voting rights in respect of any equity shares held by him in excess of ten per cent of the issued equity capital.

13H Matters to be discussed and procedure in annual general meeting

(1)The shareholders present at an annual general meeting shall be entitled to discuss and adopt-

(a) The balance sheet and profit and loss account of the Development Bank made up to the date on which its accounts are closed and balanced;

(b) The report of working of the Development Bank for the period covered by the accounts;

(c) The auditor's report on the balance sheet and accounts;

(d) Proposals for declaration of dividend and capital isation of reserves.

(2) The shareholders present at an annual general meeting may also discuss any other matter to be transacted at such meetings in accordance with the provisions of this Act.

(3) The matters relating to-

(a) The manner in which annual general meeting or other meetings are held under this Act and the procedure to be followed thereat;

(b) The manner in which voting rights may be exercised and resolutions may be passed: and

(c) The procedure for transaction of business at such meetings and related matters, shall be such as may be prescribed.]

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